Platinum price extends slide, falls below $900 to 6-1/2 year low
London (Sept 29) Platinum prices fell below $900 an ounce on Tuesday for the first time since January 2009, hurt by fears that the Volkswagen emissions scandal would cut demand from carmakers and perceptions that the market remains oversupplied.
The metal has been hit by last week's revelations that Volkswagen AG's falsified U.S. vehicle emission tests, which some believe could affect demand for diesel cars. Platinum is widely used in autocatalysts, particularly in the diesel sector.
Spot platinum was down 1.3 percent at $904.30 an ounce by 0930 GMT, having earlier hit a low of $894. The metal is on track for its biggest monthly loss since 2011 in September, and its steepest quarterly plunge in seven years.
Even before the Volkswagen scandal broke last week, it had been suffering from a ramp-up in mine supply after last year's five-month strike among platinum miners in major producer South Africa, and weakness in Chinese jewellery demand.
"Clearly what happened with Volkswagen has hit sentiment," Citi analyst David Wilson said. "(But) we also have a supply side that doesn't seem to be adjusting to the lower price environment ... in South Africa it is very difficult to cut production."
"Platinum has been on a downward trend for over a year now, partly because of the massive removal of investor money from the platinum group metals space," he said. "I think right now everyone is just grabbing onto any news that is negative, and that's driving sentiment."
Platinum's drop and falls in other precious metals comes amid a sell-off in the broader commodities market, which helped to drive global stocks to their lowest in more than two years.
Shares in commodity trading firms were hit hard and a Japanese shipper filed for bankruptcy on Tuesday, in the latest signs that tumbling energy and raw material prices are triggering a sector-wide crisis.
Platinum's discount to gold reached its widest since August 2012 at $224 an ounce, despite a drop in gold prices. Spot gold was down 0.6 percent at $1,125.33 an ounce, while U.S. gold futures for December delivery were down $6.50 an ounce at $1,125.20.
Gold has come under pressure from uncertainty over the timing of the Federal Reserve's first rate hike in nearly a decade. Conflicting views by policymakers, several of whom are scheduled to speak this week, have created more uncertainty.
"Fed policy has been instrumental in influencing gold prices for many months," HSBC said in a note.
Silver was down 0.1 percent at $14.52 an ounce, while palladium was down 0.4 percent at $641.25 an ounce.
Source: Reuters
